UK not as keen on mobile wallets as mainland Europe and US

Banks vs fintech war looms. But for now, let's pop the kettle on

The UK is lagging behind other countries in mobile wallet adoption, according to a new survey out today.

Consumers in the US and Europe are catching up with those in fast-growing economies in Asia and Latin America where mobile wallets have already become the dominant payment platform, according to an online survey of 6,000 consumers in 20 countries worldwide sponsored by global payments software firm ACI Worldwide.

The research shows that 17 per cent of US consumers now regularly use their smartphone to pay, up from 6 per cent in 2014 when the survey was last conducted. In Europe, Spanish consumers are the most active users of mobile wallets, with 25 percent using them regularly, followed by Italy (24 per cent), Sweden (23 per cent) and the UK (14 per cent).

Mobile wallet security

As adoption rise, mobile payments is becoming the new battleground between banks and fin techs firms.

Consumer confidence regarding mobile wallet security remains high. In the UK, 37 per cent of respondents said they trust their bank to protect their personal information when paying via smartphone. This confidence might be misplaced. ACI’s report warns that as more consumers adopt mobile wallets, they may also become a bigger target for criminals.

The Revised Directive on Payment Services (PSD2) next year means that banks will be obliged to open their customers’ accounts to third-party payment and information requests, a measure designed to spur innovation in digital financial services.

“The rollout of immediate payments schemes worldwide, combined with new regulation in Europe coming into effect in early 2018, will only increase the importance of mobile payments,” said Lu Zurawski, practice lead, retail banking and consumer payments, ACI Worldwide. “This will open the door for a range of new players in the payments market and we may see mobile becoming the new plastic sooner than we thought.”

“Another important factor in the US is the ubiquity of mobile wallet acceptance. With the EMV rollout behind us, most stores are NFC-enabled and the acceptance of mobile wallets is now almost guaranteed by most larger retailers and even many smaller ones,” she added.

Adoption

India tops the list of countries surveyed, with 56 per cent of consumers saying they pay with a smartphone regularly, followed by Thailand (51 per cent) and Indonesia (47 per cent). These emerging markets are leap-frogging traditional card infrastructures and usage patterns in North America and Western Europe.

“Mobile wallets really started to grow in popularity after the launch of Apple Pay almost three years ago,” Zurawski explained. “What we are seeing is a tipping point regarding adoption, which can be attributed to consumers worldwide now almost exclusively using payment-enabled devices, as older models have cycled out, with a few exceptions.”

The Chinese market is dominated by two players - Alipay and WeChat Pay. Both schemes use optical scanning "QR code" techniques at the point of sale instead of the plastic card industry standards like NFC (Near Field Communication). These new Chinese payments services are expected to drive new payment behaviours across Asia and globally. ®